The Economic Approach to Sociology

By Coleman, James S. | The World and I, January 2005 | Go to article overview

The Economic Approach to Sociology


Coleman, James S., The World and I


James S. Coleman is professor of sociology at the University of Chicago. He is a member of the American Sociological Association, the Sociological Research Association, and the Royal Swedish Academy of Sciences

Sociology is a discipline that addresses two kinds of problems: One is the explanation of how the social environment affects the actions of individuals. The second is the explanation of the functioning of social systems, including both large and small systems, and including both rigidly structured forms of social organization and loosely coupled systems.

The economic approach to sociology is a particular modeof addressing these two classes of problems. It is defined by three elements:

1. Whether the phenomenon to be explained is individual action or the behavior of a social system, the explanation involves the action of individual actors. Thus, this approach is a form of methodological individualism.

2. The individual actors are endowed with resources and interests. Interests are ordinarily taken to be selfish, or self-interest, but some work within the economic approach relaxes that restriction, allowing the individual actor to be interested in the welfare of others.

3. Each actor acts according to a principle of action which can be described as the use of resources to best realize interests.

A narrow expression of this principle is one in which the actor's interests are described as "utility," and the principle of action is described as maximization of utility subject to resource constraints. In an especially narrow form, resources are defined in a monetary unit of account, and the resource constraint is described as a budget constraint. I will not, however, restrict myself to the narrow form of the principle.

What I have called the "economic approach" to sociology could also be described as the rational action approach to sociological theory. Its central defining property is that a foundation of rational action underlies all theoretical work. This foundation means that for the second class of problems, explaining the functioning of social systems, transitions between a level of actors and a level of systems must be intrinsic to the theory. I will call these the "macro-micro transition" and the "micro-macro transition." For the first class of problems, explaining individual behavior only the first of these transitions, from macro to micro, is necessary, since the phenomenon to be explained is at the level of the individual actor.

In this article, I will restrict myself to examination of certain system-level problems, for it is these which embody the full set of problems of movement between levels. For the system-level problems the theoretical foundations consist of two components. One is rational action, as defined above, and the other is social structure, which provides the constraints, incentives, and contexts of action that bring about the transitions between micro and macro levels. .

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There are, of course, other approaches to sociological problems; the distinctiveness of the rational-structural approach can be seen by contrast to some of these approaches.

The most pervasive approach to problems of sociology is functionalism. Functionalism in sociology, like rational-structural theory, addresses problems of system behavior. The similarity between the two approaches ends there. Implicitly beginning with the observation that in a system at equilibrium, the behavior of one part of a system complements the behavior of other parts, functionalist explanations account for the existence of one part by the "functions it performs" for other parts. For example, the existence of a social stratification system in which different status is awarded to different occupations, is explained as due to the differential importance of different occupations for society. Thus stratification is explained not by efficient causes but by final causes, by the functions it performs (i. …

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